Modeling ethical culture: trickle-down management isn’t enough

How do you build an ethical culture?

In the complex topography of the modern organization, it’s not as easy as setting standards at the top and expecting them to trickle down an orderly chain of command.

A new study out of the University of Washington Foster School of Business proposes, instead, a multilevel approach to more effectively embed ethics throughout an organization.

This new model, developed from extensive observations of US Army combat units, acknowledges the circuitous path of ethics transmission.

“We have learned that transmitting ethics throughout an organization does not happen through some falling-dominoes effect,” says co-author Bruce Avolio, professor of management and director of the Foster School’s Center for Leadership and Strategic Thinking (CLST). “People are affected in roundabout ways, not only by their direct leader, but by the mechanisms in the climate and culture, and by other, less obvious players.”

Those players may include “unofficial” leaders who earn de facto authority from their peers.

Soldiers study

The Army commissioned the study by Avolio and co-authors John Schaubroeck, Steve Kozlowski and Ann Peng of Michigan State University; Sean Hannah of Wake Forest University; Robert Lord of Akron University; Linda Trevino of Penn State University; and Nikolaos Dimotakis of Georgia State University.

The team evaluated the ethical conduct, thinking, attitudes and well-being of more than 2,500 soldiers during their 2009 combat deployment in Iraq. These soldiers were organized into three nested units: Squads consist of 4-6 soldiers. Platoons consist of 3-4 squads. Companies consist of 3-4 platoons.

Studying the flow of ethics installation in the context of a military hierarchy, Avolio says, is especially informative because it’s clarity of organizational structure and emphasis on training provides perhaps the most likely setting for a cascading management style to actually be successful. In other words, if top-down management doesn’t work in the Army, it’s not likely to work anywhere.

And in terms of building an ethical culture, it does not work to just pass it down the chain of command. At least, not directly.

The study demonstrates that ethics transmission trickles down, up and around the org chart. This multidirectional motion allows ethics to circumvent an unethical manager. But to achieve a truly pervasive culture, attention to ethics has to be paid and reinforced at every level.

“Our results suggest,” Avolio says, “that building the full leadership capacity of an organization requires viewing leadership more as an integrated system of relationships that operate across hierarchical levels, driven substantially by leader and follower behaviors, peer-to-peer and the ethical culture established.”

Change agents

Avolio believes that the study’s findings provide insight to any kind of organizational change.

“Organizations are constantly trying to reinvent themselves. And if changes flowed nicely downstream, this reinvention would be easy,” he says. “But it isn’t easy. And it usually fails.”

According to recent studies, 70 percent of organizational change initiatives fail—at enormous cost to the organizations trying to change.

Even a modest improvement in the success rate of organizational efforts to install cultures of ethics or safety or customer-centrism or innovation would be incredibly valuable.

“These kinds of change-implementation projects that are typical in organizations today cannot rely on simple top-down, command-and-control leadership,” Avolio says. “In such implementations, most of the people who need to be involved are not. Or if they are involved, they don’t take ownership for the change.

“You have to find a way to influence those people to be owners, not renters. Renters do the minimum—at best—of what is expected while owners foster, guide and influence change.”

Avolio says that Foster’s Center for Leadership and Strategic Thinking is working with organizations to develop what he calls the “Total Leadership System.” “This system takes into account the people who aren’t in designated leadership roles but who have a big influence on the organization. They can be critical in getting everyone onboard with a cultural change as owners.”

Embedding Ethical Leadership within and across Organization Levels” is published in the October 2012 issue of the Academy of Management Journal.